The future of accounting is online

The future of accounting is online

Online accounting the future of finance management, the Forum of Private Business (FPB) and CreditPal have said.

FPB is helping business owners to boost their prospects of securing finance via CreditPal, the free online accounts analysis system for SMEs.

The move follows research carried out by the FPB, commissioned by CreditPal, showing that recession-hit small businesses are actively managing their cash flow yet struggling to access finance because they are not presenting their management accounts in the correct format to the finance and credit industry.

The survey found that 96% of the SME respondents have improved their cash position through better controls rather than looking for outside financing. Pursuing late payers (76%) heads the list, with placing tighter controls on ordering supplies (67%) next, followed by internal cost-cutting exercises (67%) and then deferring payments to HMRC under the Government’s ‘time to pay’ scheme (25%).

The strongest sign that the credit crisis is driving better internal financial management is that 68% of respondents said that they now produce management accounts – with 85% of these citing the reason for doing so as improving business management. However, the cost of doing this is considerable – on average, over £500 each and every time. Just 17% of respondents cited accessing credit as the motivating factor behind the production of management accounts.

“There is little doubt the UK has entered a new era of business finance,” said the FPB’s chief executive, Phil Orford. “While it remains unsustainable for lenders’ decisions on credit worthiness to be made generically, using over-centralised risk aversion criteria, business owners should be proactive in controlling their own destinies by providing thorough financial projections utilising new systems that enable management to produce up-to-date and accurate financial information.”